I need to get a new receiver for my M22s. Right now budget is a big constraint, so I can't go for $500 + receivers

I'm thinking about a 120W (Pioneer 1120), but I see the 110W models at a significant discount. My question is, is the extra 10W worth it? With the price difference, I can almost buy a center channel (~ vp100).

It's not the power you're paying for with the 1120, it's almost a completely different receiver than the 1020. The 1120 is based off the Elite platform, and has a lot more features than the 1020. You should compare the feature set and see if the difference there makes up enough for the difference in price.

10 Watts means nothing in terms of sound. But the amps in the 1120 are of a different design than the 1020, that's why they are spec'd differently in terms of power.